Netflix slides after a Wall Street analyst says it 'may have sprinted ahead of fundamentals'

NetflixNetflix’s ‘Stranger Things.’

  • Netflix‘s stock was downgraded by a Wall Street analyst after its share price exceeded the firm’s 12-month price target.
  • The analyst said that the company may have “sprinted ahead of fundamentals in the short-term.”
  • View Netflix’s stock price in real time here.

Shares of Netflix dropped 2% on Wednesday after a Wall Street analyst handed the video-streaming company a downgrade on its stock.

Stifel Analyst Scott Devitt expressed concerns over Netflix’s valuation, pointing out how the company’s share price moved above Stifel’s 12-month price target.

“We are attracted to Netflix’s business and competitive position but believe share price may have sprinted ahead of fundamentals in the short-term,” Devitt wrote in a note to investors.

In this year alone, Netflix’s stock has shot up nearly 70% year-to-date. On March 6, Netflix’s shares were trading at $US325 per share. Stifel’s 12-month price target was at $US283 per share. Devitt has rated the company a “Hold.”

The streaming company will need to exceed Wall Street’s expectations of subscriber additions into 2018, as well as keep its share outperformance momentum going, Devitt said, which “may be more difficult to achieve given the recent run and increasing expectations.”

However, most investors have been bullish on the stock. UBS recently raised its price target for Netflix to $US345 per share. According to Eric Sheridan, an analyst at UBS, Netflix is planning to spend $US8 billion on roughly 700 new original TV shows in 2018 as part of its strategy to build “a global moat” that would widen its competitive advantage.

Netflix’s stock was trading at $US317.73 per share. It was up 58.24% for the year.

Read more about why one Wall Street analyst is so bullish on Netflix.

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